I consider myself an ERP/Cloud implementation practitioner on the road to becoming a better ERP advisor and leader. I have been on this path for 20 years and believe that I have much to share with my peers. I also believe that I still have much to learn on this journey. My hope is that you will partner with me in the never-ending quest for ERP implementation success. During my ongoing research I have collected a database of over 3000 quotes on ERP-related topics (pains, success, best practices, failures, mistakes, implementations, selections). Here are my top 300 quotes.

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Often the problem lies not with the ERP concept. But in the demand for quick fixes and rapid cures to underlying structural problems.

Putting yourself on the same side as the customer is one of the best ways to avoid the massive rework caused by the customer deciding that the product you just spent 12 months on is not the right product after all.

Iterations systematically reduce the trade space, grow the knowledge of the solution, and increase stakeholder buy-in. At the same time, each iteration, or spiral, is planned to mitigate specific risks in the project.

Many ERP implementations proceed without sufficient knowledge of the possibilities or potential in the new systems. This relegates the design process to a discussion of repeating the current design (the only thing the client knows) or implementing a process that the consultants happen to know (limited to what the consultants have experienced).

There are literally thousands of decisions that must be made on these projects. The project team must be empowered to make most of them. That is one reason organizations must put their best people on these teams.

In making design decisions, the entire process should be considered, not just the individual steps, in isolation. As in many things, the business process is only as good as its weakest subprocess. Most of the attention should be focused on the process bottlenecks.

To integrate business processes, there is a tendency to employ a bottom-up technical integration, stitching together application components that were never intended to work together at the business level.

A major cause of this difficulty is that organizations building these systems tend either to assume that components can be simply thrown together or they fall back on the traditional engineering skills and processes with which they are familiar-skills and processes that have been shown not to work in the building of a COTS-based (ERP) system.

When managers of a company select an ERP package to implement, they are “buying into” the ERP vendor’s view of a certain industry’s best practices and relying on the system to support their efforts to embrace these practices.

Off-the-shelf solutions also do not provide a competitive edge for long – any technology your company can buy today your competitors can buy tomorrow. Senior executive must consider a new set of questions: What business processes bring us our identity and competitive advantage?

Successful implementations are done internally. In other words, virtually all of the work involved must be done by the company’s own people. The responsibility can’t be turned over to outsiders, such as consultants.

Unsuccessful companies start their ERP implementation effort with automation, bypassing the critical steps of understanding and simplifying their processes. These companies believe that automation alone will improve performance and lead to productivity gains. Automating complex or nonvalue-added processes, however, will not increase productivity or provide measurable improvements in performance.

Teams proceed in a linear fashion with little reliable feedback – they have good ideas, but they don’t test them in the cauldron of reality. Documents don’t work. Products do. Effective simulations or models of the actual product.

The Standish Group found that the number one reason that projects succeed is user involvement. Easy access to end-users is one of the three critical success factors in rapid-development projects. Good relationships with customers improve actual development speed. Good relations with customers improve perceived development speed.

The big bang approach promised to reduce the integration cost in conditions of thorough and careful execution. This method dominated early ERP implementations and it partially contributed to the higher rate of failure in its implementation.

Implementing the ERP system and realizing the promised benefits are two different ball games. Implementation can be a success, but if the operational phase is not planned and organized properly with the support of all the people involved, then the promised benefits will not materialize.

In the absence of knowledge and ability you can expect lower utilization throughout the organization, incorrect usage of new processes and tools, a negative impact on customers and sustained reduction productivity.

Claims of ‘proven paths’, ‘best practices’, and simplistic implementations methodologies, that fail litter the ERP landscape as each software company seeks to gain some form of advantage over its rivals.

“Certified consultants are able to translate business requirements into software configurations far more effectively than non-certified consultants. They can also provide a much more realistic forecast of what your CRM will entail in terms of time and resource requirements. “

During a period of organizational change, a company’s reward structure should be linked to achievement of the goals mandated by the change. The policies and procedures for rewards and censures must be made known to all employees at all levels, and must be implemented fairly and impartially.

What businesses need is not a one-time fix for individual processes but an environment that combines business and technical systems to produce processes that flex and recombine as required by changes in the market.

The cost of complexity isn’t offset by what you can charge. Complexity creates opportunities for you to fail your customer.

Wall Street Journal, 9-17-2002)

Gerand Arpey – American Airlines President

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Projects that skimp on upstream activities typically have to do the same work downstream at anywhere from 10 to 100 times the cost of doing it properly in the first place (Fagan 1976; Boehm and Papaccio 1988).

Are the business processes that will be automated clearly understood and documented? An adage says, “If you don’t know where you’re going, any road will take you there.” The software equivalent is less positive “If you don’t know what it is you’re automating, no system will help”.

Although consultants may participate in testing to some extent, employees should drive the majority of testing. Doing so maximizes knowledge transfer and readies them for real life under the new system.

The ability to trace requirements flow from their source (originator), through the various project phases (design, prototyping, customizations, testing, piloting, and delivery) is a requirements generation best practice.

Bait and switch. This is the practice of displaying certain consultants, during the sales process, to show the sales company understands business and the ERP implementation process to ensure a successful outcome.

When data lacks high quality, it is useless regardless of the supporting IT infrastructure in place. There is where data governance comes in. Data governance involves the creation and management of the organization structures, policies and processes needed to define, control, and ensure the quality of enterprise data.

To ensure rapid and smooth implementation, team members must be capable of dedicating 60 to 100 percent of their time to the ERP project. Lower committed times of 20 to 30 percent, or less, do not work well because of the high learning curves required for ERP implementations.

Regarding methodologies, there is nothing new under the sun. Every methodology is based upon a set of rules, environmental conditions and assumptions. All have strengths and challenges that must be addressed for success.

With the initial release of ERP, one of the key “game changers” was the ability of business users to access data and generates reports without direct IT involvement. This empowerment of the business user had a significant impact on business agility. Today, we continue to see ERP vendors focus on providing business-friendly tools for reporting and analysis. Yet, I can see a new evolution brewing in the ERP industry what I like to call “Adaptive ERP” where business users can perform on-demand actions to meet business changes real-time. In the next sections we discuss the key capabilities of Adaptive ERP and a practical assessment of where the ERP industry is today.

What is Adaptive ERP?

Adaptive ERP would enable business users to configure, simulate, test, and implement business technology changes with limited traditional IT services (ex. software development). Predictive analysis will become a reality. Logical thinking and search methods will be more valuable than technical syntax. Information will become context and even transactional specific. Following is an illustration of the major domains that Adaptive ERP should address:

Conceptual Model of Adaptive ERP

Domain: Logical Development

Too often a change in the business model requires an IT development effort. Any competent IT development will require the following activities:

Business requirements gathering

Technical design

Technical construction

Unit, System testing

In general, the greater the number of individuals involved in a project the greater the coordination/communication effort resulting in a greater time commitment. Enabling business to become agile will require an evolutionary change in how ERP supports business activities. However, simply removing people out of the equation is not the answer. What is required is providing business owners the tools and experience required to become more self-sufficient.

Logical Development for ERP

Following is a brief list of the capabilities required to enable business users to perform logical development

Business models must be defined as metadata within the ERP software.

Business rules are separate from technical components and are exposed directly to business users.

Business scenarios are defined separate from the respective business models. Business exceptions are variations to a specific business scenario.

Business users should have the ability to run simulations in production (i.e. parallel testing)

ERP must provide automated testing support

Automated unit and system testing (self-learning via business model metadata).

Automated business process test scripting.

Test scripts are a results-oriented view of business requirements.

Automated impact analysis with logical development change.

Business users should be trained in logical and structured thinking. There has to be a prescribed process to effectively conduct knowledge transfer with the ERP software. Business users should be able to directly educate (i.e. configure) the ERP software on how they run their business.

Today, there is interest in Big Data and Enterprise 2.0 technologies but they are not the final destination.

Predictive Analysis

At the end of the day, business decisions have an impact on business results. Enterprise 2.0 and Big Data are supportive technologies. Enterprise 2.0 focuses on the utilization of Web 2.0 standards in developing collaborative technologies like blogs, RSS, social bookmarking, social networking and wikis. Enterprise 2.0 emphasizes employee, partner and consumer collaboration for creating knowledge. Big Data is the next evolution in Knowledge Management where it is now viable to manage and utilize both structured and unstructured data. However, the key challenge remains – how to effectively leverage all the information we are collecting. We need to flip the following time paradigm:

Business Information Cycle

Changing this paradigm will require inference engines that streamline analysis generation and enable predictive analysis. Following is a brief list of capabilities that will support predictive analysis:

Case-Based Inference will provide recommendations based upon data and transactional patterns.

Rules-Based Inference will provide tactical, operational decision support based upon standard business principles.

Big Data will facilitate the assimilation of structured and unstructured data to identify patterns and provide operational context.

Advancements like this in analytics will enable business users to focus on the value-add activities of reviewing analysis and drawing conclusions for effective business decisions.

Domain: Open

Whether or not you are sold on open source ERP, you have to admire the new paradigm and simplicity that open source ERP promotes. As we continue to see the consumerization of legacy ERP technologies, the market will continue to drive individual user enablement and vendor independence. Following is a brief list of capabilities that will promote a more open ERP industry

BYOD (Bring Your Own Device)will enableemployees are able to bring their own computing devices – such as smartphones, laptops and PDAs – to the workplace for use and connectivity on the corporate network.

BPMN compliance will ensure that ERP business process definitions will agree with business process definition standards outlined in the Business Process Modeling Notation (BPMN) model. This model is governed by the Object Management Group (OMG). In my humble opinion, the OMG is in the best position to define a global standard for business process models. This advancement will be a key enabler to the holy grail of true enterprise system interoperability. This is no small task and will require significant market demand to promote this standardization initiative.

Collaborative Shared Development is a key benefit of an open community. Sometimes it takes a village of developers to support an ERP solution. Today, I can go to the Apple App Store to purchase an app for my iPhone. In the future, we should see an ERP App Store when a customer or an individual business user can download an object (software, report, role-based feature) to customize their ERP experience.

Open Partner Network. The more integrated your ERP is within your business value chain (suppliers, vendors, customers, providers) the more powerful your ERP system can be. I expect we will see the ERP market put more value in delivered integrations with partner, supplier, and provider networks over software product features. SOA will be a key enabler for making open partner networks a reality.

Openness is about creating flexibility and the freedom for a customer to respond to the changing business environment in the most effective manner.

Domain: Viable Solutions

A profound lesson I learned the hard way is that regardless of how many features and products an ERP vendor can provide (even for free); it will all be all in vain if the software is unmanageable. It is unacceptable that a customer has to pay triple and even quadruple the original software cost to maintain their ERP investment. Some may argue that ERP vendors have not acted in the best interest of their customers by building features upon features without providing tools to significantly reduce the Total Cost of Ownership (TCO).

Simplifying Technical Support

Following is a brief list of capabilities that will significantly reduce TCO:

Automated testing (self-learning tools).

Automated master data management (information awareness tools).

Eliminate the need for multiple instances.

Assimilated, holistic solutions– loosely coupled point systems will not work and result in greater costs and possible failures.

Minimize the technical stack.

Higher Quality Assurance

Upgrades/Software Maintenance releases included the test cases and results performed by the ERP vendor.

Example: Customer decides to store mission-critical data on-premise and internal data on the public cloud.

It should no longer be acceptable that an ERP customer has to totally shoulder additional implementation and upgrade costs. This is not indicative of a true partnership.

Challenge to ERP Industry for Adaptive ERP

Today, we continue to see a consolidation of the ERP industry. With these acquisitions some ERP vendors provide some limited capabilities of Adaptive ERP but these capabilities are spread across multiple software products and platforms. An ERP solution is only as strong as its weakest link (integration). More technologies loosely coupled together usually mean (a) more IT resources, (b) additional points of failure, and (c) a more complicated experience for business users. We have witnessed where ERP software has become bloated with features upon features without any logical progression. ERP customers are forced to deal and pay for unused features resulting in more frustration than simplicity.

Many top-tier ERP software solution packages use a systems configuration concept to set up the business environment for some time but please allow me to challenge the industry a little more. I agree that several ERP software packages provides configuration concept yet there is no clear decrease in implementation schedule (ex. SAP) or cost savings associated with this approach because the currently exposed configurations do not change that frequently (ex. Earning Codes, GL Accounts). Objects like business rules, scenarios, and exceptions change more frequently. This is a challenge for some ERP software (ex. PeopleSoft) where many business rules are encapsulated within the technical object. Pre-configurations are only a beginning – it adds value in the short-term but ERP is a long-term proposition. In my humble opinion, the key is to expose the underlying business model to business users for greater real-time interaction.

Also, there are Master Data Management (MDM) solutions available to support a tactical level of data governance by removing duplicates, standardizing data and, incorporating rules to eliminate incorrect data from entering the ERP system. For Adaptive ERP, MDM must advance in what I call “information awareness”. Information awareness means two things (1) MDM is able to automatically detect and define new information sources within the enterprise ecosystem via data polling, and (2) MDM is able to determine how data is used. These capabilities will be key enablers for automated impact analysis.

What we need to have is a mature, open, holistic solution where all the individual software platforms are assimilated into a robust, uniformed solution. This is not simply building a dashboard that brings together two separate user sessions together or an orchestration level that adds another level of technology abstraction and performance overhead. A viable solution is a manageable solution.

Summary

I’m a firm believer in performing non-competitive business activities as competent and cheap as possible. In that end I am a firm believer in ERP. However, the ERP industry has come up short in the areas of total cost of ownership and business adaptability. Many on both sides of the aisle have wrongly concluded that more software features and increasing the technical stack are the answers for making ERP adaptable. Putting more power in the hand of business users is the strategic answer for business agility. People are the most important and adaptive component of a business solution.

We have all heard the proverb “A chain is only as strong as its weakest link.” Applying this concept to business software, we would conclude that a business solution is only as strong as its weakest integration. Usually overlooked and underestimated, integration is one of the most important factors to consider as part of a best of breed vs. integrated ERP solution. The benefit of richer functionality is limited by partial integration. In the next sections, we will discuss all the factors to consider as part of making an informed decision regarding best of breed vs. integrated ERP.

Best of Breed versus Integrated ERP

The typical value proposition for best of breed software is the deeper and industry-specific functionality provided. This advantage is especially important for generating competitive advantage. It is vital that an organization’s revenue-generating business processes are competitive. However, it is not strategic to an organization to be competitive in non revenue-generating business activities. Consider the following:

Advantages and Disadvantages with Best of Breed and Integrated ERP

Allow me to expound on a few key facts expressed above:

Integrating a best of breed application with ERP software will result in additional cost and maintenance (ex. dual upgrade and maintenance cycle).

Developing integration between a best of breed application and ERP software will not be as robust as the delivered ERP integrations between its applications. Part of result has to do with the total integration cost over the life of ERP and the other area is the simple fact that the underlying data models are different.

The question I challenge my customers with is “Will having a best of breed software versus integrated ERP worth the cost?” Will the additional investment generate a significant impact to competitive advantage?

Allow me to provide a real life example. I was working with a large insurance provider with their ERP implementation. As part of the ERP implementation, the customer was considering a best of breed software package instead of utilizing delivered ERP functionality to support IT project management activities. Following is the case I presented to advise the customer in making their decision:

Building the Case for Best of Breed vs Integrated ERP

Ultimately, the business makes the decision but as business technology advisors (IT, Consultants) it is our responsibility to present all the relevant information in the appropriate content so an informed decision can be made. There is one area in particular that is generally not fully elaborated – the true cost of integration.

The True Cost of Integration

When we think about integration between two different software packages we usually only focus on transactions. To continue with the example I provided in the previous section, following is a representation of the required integrations between ERP and the best of breed packaged software.

Integration points for Best of Breed with ERP

Each packaged software has business rules and control data (ex. Project types) that govern how software functionality supports business activities. Also, consider that the underlying data models for each packaged software are different. There must be a process (either manual or automatic) in place to keep the respective business rules and control data in sync. Business transactions must also be replicated between the ERP and the Best of Breed packaged software. It is worth considering the amount of data that must be replicated between the two software packages. I understand that replication sounds much worse than integration; however, when we need to integrate transactions between different data models, replication is typically the approach taken. Even when an ERP vendor indicates they have delivered integration with a best of breed packaged software we need to ask whether the integration is services-oriented or data-oriented (replicated).

There are also strategic considerations for a customer’s IT organization. Consider the following sources:

Total Integration Costs for business software

Making the decision to implement a best of breed approach for supporting business activities will increase the total cost of IT as well as put the underlying technical architecture is not flexible and adaptable to meet emerging requirements.

Does Best of Breed Make Sense?

Let me say this loud and clear “ABSOLUTELY”. ERP can be a good integrated solution to support revenue-supporting, compliance, and generally accepted best practices. However, ERP does not support competitive practices (if it did then the business practice would no longer be competitive because it is generally available to everyone). Generally speaking, a best of breed software vendor may be more open to active collaboration and co-development with customers in developing solutions for emerging requirements – which is the nature of revenue-generating business processes. Yes, there will be the additional cost and support but the payoff is far more significant in terms of the potential for increased revenue and market share.

Summary

Business processes, not individual business functions, generate business results. Too often, we only focus on business activities and the specific software functionality that supports these activities without holistically addressing the entire business process. This limited view typically results in a short-sighted decision resulting in a higher Total Cost of Ownership (TCO) and a less flexible software solution.

Best of breed software may be the best decision for supporting revenue-generating business processes. There are times were integrated ERP is the right choice given the potential return. What is most important to consider is which choice will enable the customer to be in the best position to take advantage of future opportunities.

Every customer I assisted in their ERP implementation wanted an ERP solution that would be flexible and adaptable. One of the key challenges and disappointments customers have with ERP are around flexibility and adaptability. We also need to address the common misinterpretations associated with the concepts of a flexible and adaptable ERP solution. Referring back to a previous blog we know that ERP is only one component of a business solution. There are three key areas to address as part of developing a flexible and adaptable business solution.

Know The Limitations

Technically speaking, there are two key methods to enable packaged software like ERP to be flexible and adaptable:

Programming (addresses flexibility or the ability to change)

Configuration (addresses adaptability or the ability to easily change)

Each of these methods has inherent advantages and challenges associated with them. Configuration has been a key area of focus for ERP vendors to create greater software adaptability. Configurations enable less technical, business-oriented users to determine how ERP behaves to specific events and conditions. Configuration provides the opportunity for cost-effective flexibility to meet the unique business requirements. However, where there is no option for configuration then programming must be used to enable ERP software the flexibility to meet the unique requirement.

Programming provides an exact prescription to address a specific business event, condition, or activity. There are programming techniques and add-on utilities that provide some level of technical flexibility (examples: object-oriented programming, services-oriented architecture) but business flexibility is extremely limited at best (unless an ERP vendor can devise a practical means of applying artificial intelligence – fuzzy logic to their software). There are limitations with the amount of flexibility and adaptability you can create via software. What is important to remember is that there are other components of a business solution that better suited to address flexibility and adaptability.

Know Your Strengths

Let’s revisit the components of a business solution along with their inherent strengths.

Business Solution Strengths

Too often we do not effectively utilize the strengths of the key components of a business solution. ERP software is good at automating consistent, repeatable activities based upon a prescribed logic (business rules). ERP software is not a sustainable, cost-effective option for dynamic activities based upon fuzzy logic (business rules). People are more flexible and adaptable than ERP software. Please do not take the above statement to an extreme and infer that every customer should conform their business activities to the ERP software. ERP implementations should include software enhancements to address the unique value-add requirements of a customer.

Flexibility and adaptability only have value within the context of enabling ERP to position itself optimally in supporting key business drivers. Next, we will discuss the common drivers that must be coordinated as part of addressing flexibility and adaptability.

Finding Balance

Every customer will have unique business drivers that must be managed in a balanced approach. Given my implementation experience following are what I consider the common business drivers that we might address as part of an ERP implementation.

A balanced ERP solution

Can we have a flexible and adaptable ERP solution? I believe that the answer is yes. Can we have an efficient and effective ERP solution? Yes. Can we have a scalable and efficient solution? Yes, however we can only experience both characteristics to a certain level. The challenge I observed is when an extreme position is taken in one of these areas. Like a ball on a flat table once we start tilting the table (taking an extreme position) the ball will roll off the table – – along with your ERP implementation.

Finding balance is an ongoing exercise to find the right level of applying the influence of the specific business driver upon the ERP project. It is also important to know and understand at what level of influence will business drivers start conflicting with one another.

Summary

Flexibility and adaptability are reasonable expectations for a business solution. The key challenges in this area tend to be around inaccurate expectations and not effectively utilizing the individual components of a business solution. What is required is a practical analysis of the strengths, weaknesses, and business drivers to develop a balanced approach for success. This analysis is not a one-time event but a continuous effort that is triggered when emerging pain is experienced. Experiencing pain provides the opportunity for rebalancing your ERP solution.

How do you measure knowledge transfer? Customers – have you ever received a report or completed checklist that demonstrated the Implementation Partner conducted knowledge transfer? Knowledge transfer is a process, not just a milestone task on a project plan. Consider the following illustration to identify the importance of knowledge transfer.

Business Solution Defined

In a previous article I referred to this view and also identified people as the component with the largest impact to a successful business solution. A key enabler for people being successful is Implementation Partners conducting effective knowledge transfer. For many ERP implementations, knowledge transfer is a process that is loosely managed which results in the Implementation Partner providing support long after the go-live date. For an area so important it demands that we formalize this process to ensure completeness.

Best Practice: Knowledge Transfer Plan

Simply put, if you want to ensure that an objective is reached then you need a plan. A knowledge transfer plan first defines the knowledge transfer process and the methods that will be used to conduct knowledge transfer. Second, it defines all the customer’s roles & responsibilities that are required to support the entire business solution – both from a functional and technical perspective. Third, the knowledge transfer plan should act as a checklist for each individual role validating that effective knowledge transfer has taken place. Following is an example of a knowledge transfer plan.

Knowledge Transfer Plan

Effective knowledge transfer is more than just training or having a user sit next to a consultant. It requires a holistic approach in using several methods (training, mentoring, knowledge generation, and interactions) to be successful. The end result of knowledge transfer is enabling the customer to support their new business solution.

Implications for Implementation Partners

Knowledge is power! Knowledge can be money and a key source of competitive advantage for an Implementation Partner. For an Implementation Partner a key concern is balancing knowledge transfer to ensure customer success versus providing too much knowledge resulting in the customer terminating services early. It’s important for customers to keep in mind that knowledge sharing happens more freely in a trusted environment.

There are two broad categories of service that an Implementation Partner can provide: staff leadership and staff augmentation.

ERP Implementation Service Spectrum

To achieve greater customer enablement Implementation Partners should play more of a staff leadership role during the implementation. Customers, there is a price associated with effective knowledge transfer. Also keep in mind that there are greater resource requirements (i.e. knowledge, experience, advisory) for staff leadership services. Price should not be the only consideration when comparing staff leadership versus staff augmentation services.

Summary

True enablement is based upon customers selecting consulting firms that act as a true partner and not just staff augmentation. If customers only require staff augmentation then I suggest customers get it as cheap as possible, yet don’t expect any reliable knowledge transfer to occur. If this is the first ERP implementation for the customer then I would recommend that the customer selects an Implementation Partner that not only assist your project team but more importantly train and enable your project team to be successful on your own. That is what a true partner would do. To maximize knowledge transfer the customer needs to foster a trusted work environment. Customers – it’s in your best interest to take the lead in creating this environment.

There is a misconception in the ERP market that says technology is the key enabler to business maturity. In a previous blog (ERP is Only Part of a Business Solution) I discussed the supporting role ERP plays in a business solution. Business processes and people have a far greater influence on business process maturity and business results. Let’s clear up this misconception by examining two areas that have driven its general adoption.

Is Technology changing Business?

I do not believe that technology is changing business but rather technology is finally catching up with leading business practices. For example, back in the early nineties I read a book on the e-business revolution. The major premise of the book was that technology was transforming existing business models into an e-business model. The book provided an example where inventory stocks could now be checked in retailer stores and inventory orders could be generated to maintain a desired stock level. The book explained that this is an emerging requirement due to new e-business technology.

I have to humbly disagree with this analysis. The above requirement had always been a desire of business. I remember back in the early fifties when my father would make the rounds as a salesman to his retailer customers to see their inventory and manually created orders to maintain the retailer’s inventory levels. Many businesses did not perform this process because (a) it was manually intensive work, and (b) it reduced focus on higher priority business activities. Technology is now providing a cost-effective vehicle to accomplish this business requirement.

Build It and They will Come

Everyone has heard the phrase “build it and they will come”. Several internal IT and external Implementation Partners & ERP vendors have used new technology as the value proposition for ERP implementations. This philosophy may have worked in the era of “green screens” and emerging client/server technologies but it does not work in today’s world. Technology driving Business is like putting the cart before the horse. I recently talked with a customer where the IT organization and ERP vendor took the above approach for implementing new Business Intelligence (BI) software. The business users felt limited and constrained by the technology. Results – user adoption was low and now business users are looking at implementing their own BI solution(s). Needless to say that the ERP vendor, the Implementation Partner, and their own internal IT organization are no longer considered trusted advisors.

What Drives Business Results?

Technology is a great enabler that can play a role in supporting the generation of business value. However, technology is not always the best approach to address problems that may be inherent in the business model. Example: automating non-value-add business activities will not generate business value for the customer. Also consider that most business value is generated outside the ERP software. “Making decisions and implementing them is where business value is created in an organization.” (Dawson, Ross. Developing Knowledge-Based Client Relationships. Butterworth Heinemann, 2000). ERP does not have the capacity to make decisions having considered a diverse range of issues, and will not have the capacity to do so in the near future (maybe in our lifetime we should have artificial intelligence capabilities embedded within ERP). Knowledge is only an attribute of people. Technology stores information. So how should we leverage ERP to support greater business results and business maturity? Consider the follow illustration:

Key Drivers for Business Results

It is important to note that business processes and people have a far greater impact on business results than technology. Technology can be a cost-effective solution in automating consistent rules and activities. However, technology like ERP can only utilize information that has been codified. There will always be tribal business-related knowledge and experience that exists outside technology. Some of this tribal knowledge is leading or emerging business activities/rules. In this situation where business rules and activities are radically evolving then technology is not a cost-effective solution for automation.

Summary

It is important to understand and appreciate what technology can and cannot do for a customer. Often the true problem lies not with the ERP software itself (granted there always software bugs and fixes to apply) but rather the demand for quick fixes and rapid cures to business challenges. If the ERP software did not improve the performance of the underlying business model then executive management would conclude that the ERP implementation was a failure.

Technology like ERP can be an enabler and a limitation for customers. To ensure enablement over limitation you must first understand the right relationship between business and technology. Once you understand the key strengths and weaknesses of both areas then you will have a greater insight to the right application of technology to support the customer in driving valued business results.

We have all heard the phrase “Get right the first time” used as part of an effort to reduce costs and accelerate implementations. Unfortunately, many have interpreted this to mean doing an activity once. We attempt to run ERP implementations as a production process. Good production processes deliver the anticipated result (a known result), for a standard cost, within a given time. In contract, ERP implementations are more of an exploration process given the customer variability. Consider the following illustration:

Unique Factors for ERP Implementations

A recurring problem we have with ERP implementations is that we try to “big bang” activities and do not provide an opportunity to learn, adjust, and correct for success. Iterating certain implementation activities will give us that opportunity. Let me provide you with a just a few examples.

Project Estimating

As stated in the Project Management Institute’s (PMI) Project Manager’s Body of Knowledge (PMBOK) there are three types of estimates or what I like to call “levels of understanding”. Estimating is based upon our level of understanding regarding effort, scope, assumptions, constraints, and objectives.

ERP Estimates

As you move further into an ERP implementation the better we are able to estimate. Why? The key reason is that you have more proven information to base your estimation. I worked on generating ERP implementation estimates for the last 10 years and I can safely say that I could never generate a definitive estimate without first going through a detailed fit/gap. Yet, we expect to hit an implementation estimate that was created before any implementation work is done. There should be no surprise to the fact that most ERP implementations do not hit their budget given the level of accuracy associated with the estimate.

Gathering Requirements

Another area for an iterative approach is in requirements gathering. Recently, I was asked what the best approach for gathering requirements was and my response was that there is no one good approach.

Methods for gathering ERP requirements

Do not limit yourself to one method for defining requirements. The more methods (perspectives) you employ to gather requirements the greater the probability for success because the project will have the opportunity to create a holistic requirements definition.

Summary

I firmly believe that every customer’s ERP implementation is unique. Because every ERP implementation is unique there are a large number of unknowns that we try to address given the limited information we have. We should take a risk-adverse, iterative approach to remove implementation uncertainty. Do you think this cause and effect could apply to other areas of an implementation (example: testing, development)? I am interested to hear your thoughts.